Good, still morning. Good morning, all. Our next session is with Andrew Robinson of Skyward. We had him up yesterday talking about AI. We are going to talk about AI again pretty soon, but I just wanted to open the floor for opening comments from a Skyward perspective. How is the world looking to you?
Well, first off, thank you, by the way. I really enjoy doing this every year with you. Look, I think from a Skyward perspective, for those of you who follow us, you know that we undertook a transaction in buying Apollo that closed at the beginning of the year. I do think that is a relatively significant move for our company that opens up the possibilities in lots of ways that were not really available to us previously. Obviously, a market with a Lloyd's platform, a fee-generating business which we aim to grow and develop, a really unique set of capabilities in the digital economy with ibott, specialty classes that we can access today with Apollo Syndicate 1969, a syndicate dedicated towards that.
I think that our perspective would be it is an increasingly challenging market backdrop, but we have a far broader platform to work with by adding Apollo to what was a really great U.S. specialty business at Skyward. So, all things are not dark, despite the fact that those of you who went to Monte Carlo might have walked away thinking that capital is rushing into the business way too fast. I think that we have a lot of things that we are excited about that are really not rushing into the face of that competition. So good. It is all good.
All right. Fantastic. We will delve into that. But one of our conclusions from Monte Carlo is that if you buy reinsurance, not so bad.
Yeah. Yeah. Unfortunately, the reinsurance insurance markets are connected in a way that it might start out as a benefit to the buyers of reinsurance, but ultimately, too much capital is not good for anybody.
Fair enough, yeah. I wouldn't dispute that. I want to spend a little time on AI, just because what I'm trying to get from companies, and Skyward has been absolutely among the leaders of this, is just a picture of where we on the outside can see the benefits of leadership in adopting AI, implementing it. There are a number of different places, but from your perspective, if we're looking over your shoulder, we should expect to see the benefits of AI where and when in the financials?
We get asked this question a lot. I'm just going to declare not to be too opaque on this. I think it is really hard to isolate on one single dimension. What can AI affect, right? I have openly spoken about, and in our investor materials, there's data out there that we provide, about examples that clearly should improve efficiency, should improve underwriting acuity, meaning that you should actually be able to affect loss ratio. There's things that I talked about yesterday on the panel that have to do with new product domains that are much more AI-native thinking that fundamentally reimagine how insurance is conducted that should be growth oriented.
But to isolate and say, "Hey, I'm going to see this dimension of your underwriting income actually move specifically related to AI," I think that's like asking the question of how much of your combined ratio is moving relative to rate versus portfolio versus other things that are going on, all that are happening simultaneously in the business. We certainly as an organization have a good deal of tracking that is our assessment of the things that we're doing. But not all of that is easily traceable into our P&L. That said, I think if you look at our financials, clearly we're outgrowing the industry, and clearly our loss ratios are quite consistent, and our expense ratio are getting better. I would like to think that AI is obviously contributing to those good things.
Okay, fair enough. I think for those of us with simple minds like myself, we'd love to be able to say that, but maybe it's a little bit more complicated and too bad. Okay. Moving along. It just is what it is. A couple of years ago, and again, ahead of the industry and certainly ahead of market sentiment, you said, "Look, this is a cyclical industry. We've had a few, maybe a prolonged period of rising rates. Not going to last forever. So we want to focus on less cyclical lines." I was hoping you could start with that and just talk about how you are navigating what is, depending on how you want to frame it, a softening market. Maybe when I say that, I'm talking about the second derivative of pricing. That's a negative number.
Yep.
How are you navigating that?
Yeah. So, fortunately or unfortunately, depending on your perspective, having been around the industry for 35 years, I just have way too much scar tissue related to what effectively is a cyclical industry. There's been a lot of talk that data, information, post Spitzer, everything else would suggest that the amplitudes of the cycle should be less great. I don't think there's really any evidence of that. We just came out of a monumental hard market that ran far longer than anybody ever thought it should. And I believe we should revisit it in the next couple of quarters. I think the speed in which certain areas of the market are softening are as fast as anything I've seen in the course of my 35-year career. So, I think from our perspective, probably I'll start with what we didn't do, right?
Back in 2022, 2023, we had hit a kind of once in a lifetime hard market in property, particularly in cat property. And we effectively elected not really to participate in that. And it was really quite straightforward because our whole strategy is really found in this idea of rule your niche, building positions that are defensible. For us, that tends to involve areas of the market that are quite small, where you can target them with product that's very specific to that particular need. It has a lot to do with talent and technology. And quite honestly, writing cat property is like swapping capacity. There's not a lot that we can bring to it that others can't. And while you can write up and capture margin, we're not going to be able to defend that.
I look at some of our public competitors who now have to explain to their investors why it is that their property books are shrinking at rates that are really quite significant. We avoided that, and through that process, we also had to explain that to investors. A big part of that was really about where it is that we are putting our capital. I guess probably going back now 2 and a half, 3 years ago, long before the soft market really came into focus or started to come into focus, we started to specifically talk about building a portion of our portfolio in categories that are less cycle exposed. For us, that included surety, ag, A&H, credit, captives.
With the addition of Apollo, that includes ibott, which is focused on digital economy because we're doing things quite different than what the market is doing. Today, of our roughly $4.5 billion of controlled premium or $3 billion of reported gross written premium, about half of our portfolio is in those categories that aren't cycle exposed. I do think that amongst anybody in the public universe that you'd characterize a small to mid-cap company, I'd describe it as maybe less than $20 billion market cap, you can't find a company that has as well-diversified a portfolio as we do, which I believe will serve us incredibly well in terms of how our financial performance compares over the coming few years as compared to the market.
Okay, great. I'm going to be continually surveying the room if there are questions that anyone has. I want to make sure that you get any information you need. Please raise your hand. We'll get a mic to you if there are any questions. Otherwise, I'm going to continue to jump along. Let's look at Skyward's stock price. It's done with some volatility in an impetuous marketplace. It's done really well. You could still argue that there's a discount to other companies, whether we're talking about the diversification, the actual expertise, the niche component of it. People ultimately pay for that. When you have conversations with investors, what is it that maybe, and I don't want to insult anyone, but what is it that they're not seeing yet? How do you-
Yeah
Answer those concerns?
That's a really great question. We had a dinner last night with a number of investors, and this was actually one of the first conversations we had. So maybe just as background for folks who aren't familiar with us, we took the company public in January of 2023. We were actually the first company to go public across the world post the SPAC desert that led to a period of nobody going public. We took the company public at $15, and today, I haven't looked at our stock price, but we're trading somewhere in the mid-50s to upper 50s kind of numbers. You'd say that's a pretty good return when, in fact, we're actually trading at a lower multiple of earnings today than when we took the company public. Yet we've had 14 straight quarters where we've beat the street estimates every single quarter.
We're growing as a company over that period of time, high teens kind of compounded growth rate, and consistently delivering high teens, low 20s returns on capital. Look, I think from our perspective, I had this conversation with one of our investors last night who was sitting next to me, and I think that all you can do is you can just control the inputs and make sure that the way that we are talking about the company is authentic and also viewed by our investors as being useful and transparent and over time will be rewarded. We're in it for the long term. I think that as long as you have that orientation, that will work out. It's hard to know, though. I think that we are significantly undervalued on any basis.
Your own analysis would suggest that you just put us on any regression line, and the company is an $80 stock in the course of the next 12 months. Hopefully, our performance will ultimately be rewarded along those lines, and we'll just keep doing what we're doing.
Yeah. Fantastic. I will say from my perspective, there are two premises that justify having equity research analysts. One is that the market can be wrong in the short term, and the second is that eventually it'll get it right. So I remain confident on that. Anyhow, moving along to talent. Look, ruling your niche means you need to have-
The talent
Underwriting expertise, right? You've attracted a lot of talent since you've come to Skyward. Can you talk about what it takes to attract, what it takes to retain this talent, to make sure that they're not just people that are bouncing around? If they're good, you want them to stay.
Yeah. This is also a question that gets asked a lot. Fortunately, we just hired our head of investor relations, Jordan Arnold, who's here. We had hired from Marsh, and I asked her to answer this question when analysts ask, and she tells a story about how the first conversation was with me, and we had three conversations in the first week. I don't know if anybody was following us, you saw that we hired a really impressive inland marine team from a competitor. We announced that this week. Look, I would just basically say that we have been an organization that has been focused on drawing the top-tier talents in our industry.
I think at the most basic level, if you spend time reviewing what's in the public domain about our culture, our performance, the level of engagement we have with our employees, basic stuff like our Glassdoor ratings, the various awards that we win, it reflects our company as it is, which is this organization that kind of, I know this is going to be really technical, there's no shitheads in our company. There are no egos. We're a very flat company. We try to avoid the bureaucracy. You have to have good control as a public company. But in the end, if you're really focused on giving people who want to build a profitable business the support and tools to do that, and that's your North Star, it tends to just become who you are as a company.
That is reflected in everything that you read and see out there, whether it is every single year for the last four years, we have been recognized as a Business Journal's best place to work. The last couple weeks, we were recognized unsolicited by Newsweek as one of America's top companies, and that is a very quantitative kind of analysis based on everything that is in the public domain. It really has to do with this culture that we have created, the level of employee engagement, and the fact that we are focused on giving people who are entrusted to basically deploy the company's capital in smart ways with the tools and the support to just go do that. I think we are of the size where we can do that in a quite flat, empowered, connected way. That is how people experience us. We have outflanked our competition.
That includes competition coming from private equity in the MGA world and so forth with getting great underwriters, great claims technicians and all the support functions. We have been very successful in retaining those people as well. Last year, our voluntary attrition was 4%, and we exchanged that data with other companies, and that was the best amongst anybody in the cohort that we exchanged that data with. That really speaks to not just our ability to attract talent, but keep the talent that we have in our company, really excited about what we are doing.
Yeah, the number I have in my head for the industry is about 10.
Yeah.
That is like half that. Can we get an update just as a follow-up on talent availability in the marketplace now? I know there is this pull to the MGA world, and that is competition for you, but it also probably means that people are open to considering alternatives. What does the overall market for talent look like now?
This is a bias that I have, and at the risk of probably upsetting some people, I think that some of the zeal around the MGA world is starting to settle because there's been some failures out there. Just if you look at the news over the last few days, the number of announcements in the transactional liability market.
Capacity being pulled and so forth. I think that there was the vision of, I'm an underwriter, I'm going to go get rich, versus reality is driven by the market realities of, hey, listen, the North Star in an underwriting business has to be underwriting profit. I'm not saying that MGAs, in their entirety, are not focused on that, but MGA value creation is through a different measure, right? That measure has to do with EBITDA growth. That's led to some, I think there's some hazard between that different North Star. I don't think it's played out for everybody as expected, and I think the sort of the realities have settled the market to a certain extent. On the flip side, I would say that we are generally attracting underwriters who want to work at a company with a really high-quality balance sheet.
I think that the people that we attract are not necessarily thinking about an option for a career in moving to an MGA. I think our proposition to those people is equal parts, this is a great environment. You can also create wealth in our company. I think that we've done that. By the way, at our IPO, we distributed equity to every single employee in our company, and we did it again as part of an ordinary process a year ago. We sort of believe that the proposition on wealth creation and also having the stability of being part of a fully integrated balance sheet attracts the kind of people that come to our organization. For us, we don't really find it as being a limit to how it is that we're going to grow our business.
Okay. I want to spend some time on individual product lines because that's really the heart of the business. Starting with A&H, which is conceptually sort of loose. But you've talked about changing competition, and you talked about your focus on medical cost management. I was hoping you could dive a little bit more into that. How is the marketplace changing, and what specifically, when you say medical cost management, what does that mean?
What do we mean, yeah.
Where's the profit center?
Our A&H business, which I would describe as a non-P&C cyclical business, is focused on a single product area, which is medical stop loss. These are effectively companies that self-insure for their medical benefits, and they're buying, effectively, an excess of loss that protects a specific individual as well as the aggregate loss of the company. Our focus is on smaller employers, so we tend to sort of categorize that as 500 employees and less. Our angle is on this sort of dimension of medical cost management, which really means that oftentimes we're addressing companies that are coming out of the guaranteed cost market, the Blues, the Cignas, Universal, the larger carriers who are trying to take control of their medical costs. That has multiple dimensions for us. But I'll just give you a very simple example.
A simple example might be an employer who has a concentration of their employees in one particular area, it is an ordinary practice for us to establish providers in that area. We're using Medicare pricing as our reference basis for any kind of procedures, any kind of provider procedures. In so doing, we're able to take control of medical costs in a way that few others can. There are, because of the cost of healthcare in the U.S. and the burden that's placing on businesses, the creativity in which we approach that problem, that being just a simple example, has really attracted to our company almost, I would describe it as, a limitless amount of opportunity, right?
We have found halfway houses for companies who are coming out of the guaranteed cost market who do not want to self-insure for themselves with group captives where they come together with other companies, and they are sharing in risk with other companies, but under the same kind of concept. As a result, our A&H business is one of our two fastest-growing businesses. I oftentimes will cite the less public data. NAIC reported that amongst the top 50 insurers, we were the fourth best in terms of our loss ratio. A loss ratio for us that generates high 20s kind of returns on capital.
Yet we have been able to grow that business at over 25% a year because of the way that we have focused ourselves and steering clear of the parts of the market that really have gone through a lot of pain over the course of the last few years. Which, by the way, as that pain has been corrected, it just has a knock-on effect that sort of further strengthens the opportunity that we see there. That is a niche that we have demonstrated a real capacity to capitalize on in a way that others have not.
Okay. The ability to control the medical cost side of things. That is something you just delved a little bit more into-
Yep
Into what that, I am going to say secret sauce. I am sure you do not want to give it all away, but
Yeah, look, I think that there's a whole bunch of dimensions to that. On the underwriting side, I'll just give you a simple example. You've cited this, that when we took the company public, one of the great examples that we gave was how we were using AI in our underwriting process. A good example is companies coming out of guaranteed cost market. A lot of information that you would like to have available for underwriting is not available. We are using AI to basically capture medical information about that group on an anonymized basis to be able to identify things that potentially could give insight to underwriting risks that otherwise we wouldn't have access to because you're relying on the brokers to collect information. It's a very costly exercise.
That's at the front end of the process that allows us to be able to identify things that we might laser out in terms of coverage. Another simple example is one of the key drivers of medical cost inflation, which is running in the high teens, is drug costs. We work with small pharmaceutical providers. We negotiate a lot of our own prices. We have direct relationships with Canadian suppliers on certain high-use drugs. These are all things that we deliver to our customers that otherwise they could not access. We have nurses and clinicians on staff. Oftentimes when a claim is quite severe, for our company, we are negotiating with the provider a fair payment of that service before we pay, which is an unusual approach that occurs in our industry.
Where oftentimes the payment goes to the provider, and if there's a negotiation to occur, the pursuit happens afterwards, and we have flipped that around in terms of how it is that we, particularly when you're dealing with very large claims. Those are just small examples of the things that we're doing that are all built around this idea of medical cost management.
Okay, fantastic. I'm going to move into other product lines, so it's going to sound like I'm jumping around. Again, if there are questions, please just raise your hand and we'll get you a mic. Can you talk, this is a very specific question, but about Apollo's risks and opportunities amid a somewhat turbulent Middle East?
Yeah. Sometimes if you are a CEO, you like to look smart, even if it is just dumb luck. I think this is one of those cases where when we announced the transaction, obviously, the activity in the Middle East had not yet developed. Since then, the industry, and particularly at Lloyd's, you are going to see losses that are running through companies' results and fully into the reinsurance programs and exhausting the reinsurance programs. This we do know. Yet Apollo basically saw the potential risk in the Middle East and had been active in reducing the exposure. A number I cited yesterday to an investor was about a half a billion dollars of total TIV. Tarrant had corrected me that it was actually below that.
The reason that the company had brought down its exposure in the Middle East is just simply the view that the company was not being paid for the risk that we are now seeing. So our results have been, on a relative basis, very good. We announced about 2.5, $3 million of losses in our cat line last quarter, which was really related to one very specific loss, which was a big vertical loss. There is really nothing else that is notable at this point. On the flip side, we are obviously seeing opportunities along with everybody else around things that are happening in the Middle East. We are not writing oil tankers moving through the strait, but we are seeing some second sort of order opportunities. You can think about land-based exposure in countries that are exposed like Saudi, but we are not writing primary torts.
A good example that we oftentimes give is that we have written a car park in Saudi that clearly is exposed to war, but quite honestly, we view it as not a primary target. We have pursued and written some sea-based exposures. So these are service ships, things like tugs that help boats come in and out of ports and things like that, which might be a little bit more high on the severity list. But we are seeing quite attractive pricing, and we will continue to try to pick and choose and put ourselves in a position to be successful in writing. I think things that we can write at returns that we are pretty confident in.
Okay, fantastic. If we look beyond that in Apollo, I am asking mostly because it is a little bit less familiar to us than the Skyward Specialty side, what other products are they working on, or products have they rolled out recently?
Yeah, listen, I think there's a whole bunch, but I think the one that we talk about, because it was a headline thing, is that we are Uber's sole insurance partner and insuring the platform in the autonomous vehicle market. Effectively, without boring everybody more than I already am, autonomous vehicles are not an auto insurance, commercial auto insurance. If you think about it really crosses product liability, general liability, auto liability, and a unique product domain. Uber concluded that as one of the key drivers to facilitate the growth in that market, that they needed a platform liability cover that would effectively wrap in all participants in the AV ecosystem. Over a period of months, we were working with them on building that product and then launching it as the sole insurance partner to them.
For anybody who's following what's happening in the world of autonomy and AVs in particular, although that's not the only avenue for growth in autonomy, where we have more experience than any other carrier in the world as a company that has been ensuring autonomous vehicles for over 10 years. We're very data rich in this. That opportunity over some horizon 3, 4, 5 years, and certainly as you look out beyond that, should be an immense opportunity for our company, and we're uniquely positioned amongst anybody in the insurance universe to grow with that market. Quite honestly, at the expense of other personal auto and commercial auto exposures that effectively will be cannibalized by AVs.
Right. I would imagine between your telematics capabilities and Uber's data, you have real-time information on frequency.
This is the unique thing that stands out about Apollo's ibott business is that the business was built around the digital economy risk, so think about sharing economy and so forth. The whole model is built around a data integration and connectivity with our cedents. We are receiving almost persistent information around exposure. We are able to effectively, equally, persistently reprice based on changes in exposure. We actually charge those clients based on exposure, so usage. If you're thinking about the world of AVs, we get paid on a per mile basis. That level of connectivity with our insureds is a comprehensive re-imagining of insurance in a way that nobody else has. Quite honestly is, I wouldn't describe it as unassailable, but because the strategic importance of that information, our digital economy clients are not inclined to share that information with many others.
We oftentimes will cite DoorDash as an example. That position that we have with DoorDash with terabytes and terabytes of knowledge that we've accumulated over the years, driving how it is that we persistently maintain the pricing integrity and getting paid on an exposure basis. That position is virtually unassailable because it isn't in the interest of the insurer to share that information broadly into the market because of the proprietary nature of it. When you're put in that position, that's a great position to be in as a company.
Okay, fantastic. On a basic level, how should we think about cat exposure at Apollo versus Skyward Specialty?
I think that there is a modest amount more cat if you look across the entire Apollo business. But I think when we gave guidance at the beginning of the year, we said our cat loss as a percentage of our overall combined ratio should be 2.5%-ish, give or take a bit. I forget the specific guidance, and I think that in that Apollo might be a tad bit more and our Skyward Specialty U.S. business a tad bit less. But they're similar in philosophy in that writing cat is not a particular point of focus, largely because in the end, it really is about capacity swapping at the points in time when you believe that you can earn a return.
Okay, understood. Can we jump into the captive side of things? My initial superficial view is if traditional insurance is becoming cheaper, there would be less demand for captives. What's the Skyward outlook and operating strategy in what is, I think, a softening market?
Yeah. I will go back to something that you asked earlier on. Our captives division is one of the divisions that we would classify as not cycle exposed, and the data would support that, right? Because coming out of the period from 2010 to 2019 soft market years, the captive market continued to grow in spite of the fact that the traditional guaranteed cost market continued to see negative pricing period on period on period. What I will say to you is that if you look at our captive results, our captive business has shrunk over the course of the last year and a half. That is specific to one particular decision by one of our captives to effectively transition an excess exposure to the guaranteed cost market. We think that that was sensible for them.
It definitely is not seeing the kind of growth that you would ordinarily see during the hard market, but I think that we believe that the thesis, which is captives as a solution, which is an insured who is seeking to directly participate in high-quality risk management as opposed to putting that into the guaranteed cost market, is a proposition that is attractive regardless of market conditions for the best risk managers. I do believe that we will continue to see the captive part of our business over the medium-term horizon to continue to grow.
Okay, fantastic. Again, if there are questions, please raise your hand. Going to professional lines. This is a line of business where we had a lot of softness in 2022 and subsequent head fakes in terms of green shoots that never materialized. What is your outlook now?
Listen, I think professional is quite soft. I mean, the headlines that people refer to as the management liability market, executive liability market, D&O. The public part of that is in a multi-year. There was a period where the market basically was massively underpriced and went through the SPAC heydays of an intensely hard market, and then proceeded in a small number of quarters to give it all back and act in a stupid way that our insurance industry sometimes can act. We steer clear of things like that. We try to play in places where we can truly rule our niche. Examples of that are we are probably the largest writer of Web3 executive liability exposure in the industry. We are big writers in cannabis.
On the professional side, our focus for growth really is in the healthcare professional market, which has been, I think, a pretty good business for us and continues to. Because the way that exposures are shifting around under the current administration has created opportunities to rethink the way that you address that market. More recently, we have built one of the most profitable books of what we would characterize as miscellaneous professional liability, which covers a sundry set of professional areas. That profitability has attracted a lot of competition, including MGAs that have been picking off that business, where now we are purely in defense mode and not really in growth mode.
All that is to say that I think in aggregate, yeah, we have a couple places that we feel pretty good about, but the professional liability, the claims-made business, I think is in a structural soft market, the way that I would characterize where the occurrence liability market is going.
Okay. Bleak, but better to know that ahead of time.
Yeah. I mean, it is not a place to get excited about, I would say that.
Okay, fair enough. Can you highlight the difference between your agriculture book and the crop multi-peril as we think about it in terms of the government programs?
Yeah. Our agriculture book is broken into two major pieces for those who are students of the ag market. One piece is focused on crop, and that crop market is focused on only programs around the world where government provides subsidization, because we believe in that we can insert ourselves as a reinsurer to the Approved Insurance Providers and be able to diversify our portfolio in a way that we're not overexposed to any particular crop or any particular peril. That's a big part of our business. The second part of our business is the U.S. dairy livestock program, which is a program that was launched by the government in 2019 that effectively provides price protection to dairy, milk, and livestock, beef, effectively, producers. Today, we operate as a reinsurer to the Approved Insurance Providers.
As a reinsurer, we avail ourselves to financial hedges that the AIPs can't avail themselves to, and we have built a position as the single dominant player in that market, with probably a four-year advantage in how it is that we've built that product. You're seeing the profitable growth that results from that.
Okay, fantastic. If I can move to surety, which I talk about a lot. I bore people because I love it.
So do we.
Can you talk about where you are and how the current macroeconomy is driving demand for surety?
Yeah. Listen, surety, we are unbelievable. We're a top-tier business. We're the 14th largest surety writer in the country. It's about a $200 million business. Unbelievable returns. We effectively had taken a business that was about $3 million when I arrived six years ago, and turned it into one of the key profit drivers in our business. It is a mix of both contract surety, so the construction of things, and commercial surety, which is guaranteeing effectively performance of non-construction types of risks. It's been a great market. I think that we have a very well-diversified book of, on the contract side, of federal government, municipalities, U.S. Small Business Administration, and then other sundry kinds of risks.
On the commercial side, we run the gamut from providing license and permit bonds to cannabis sellers, all the way through doing interconnect bonds to solar farms that are putting energy back onto the grid and have to meet performance requirements. That business is unique in terms of how it works. Implicit in your question is the data center boom another impetus for the surety market? For us, it'll certainly have a second order effect. We will certainly be seeing growth in the surety market, not necessarily towards general contractors who are constructing these multi-billion dollar plus projects, but oftentimes a lot of the secondary subcontractors and service providers that are both going to surround the build as well as the operate of the data centers.
Our growth, which has consistently been in the high teens over the last few years, which is vastly greater than the market, is really not being driven by that dimension as of yet.
Okay, fantastic. We have time for one final question, and I want to focus on the fee generating businesses that came along with Apollo. What is the strategy for growing that particular line item?
Yeah. For those of you who look at our P&L, we have a specific gross fees and then costs associated with those fees on our P&L, so it is quite transparent. There are really two drivers, because we support Syndicate 1969, Syndicate 1971, two syndicates with 25% of the risk capital. The other 75% is third capital providers, and we receive both effectively capacity fees as well as performance fees, and that is one portion of what goes into that fee item. The other is that we have a partner syndicate business where effectively we work on behalf of Lloyd's to oversee syndicates that we do not necessarily have capital deployed into. That service runs the gamut from underwriting oversight to all the regulatory oversight and having those syndicates operate to the level of performance and quality that Lloyd's expects.
Those include some of the most innovative things that are happening at Lloyd's, a large parametric syndicate. We were the first at Lloyd's to launch a large global technologies group captive at Lloyd's, and since that time, I think that we are still today the only overseer of any single company group captives at Lloyd's, which is a growing part of the business for Lloyd's. Along with a whole number of other interesting syndicates that Lloyd's is encouraging as part of their addressable market. We are in the center of that, and we see that fee-based business, both in terms of third-party capital and the partner syndicate business, as being a really important earnings driver in our business as we look over the course of the next handful of years.
Okay. As usual, there is more good stuff going on at Skyward than we have time to talk about. But thank you very much for
Thanks so much.
I think we covered a lot of ground, and thank you very much for the time and insights.
Thank you.
All right, thanks so much. I hope the capturing